Insufficient and noncompliant financial operations resulted in the downfall of North Carolina-based regional mental healthcare provider New River Behavioral Healthcare, the Winston-Salem Journal reports.
The agency, which closed its doors in October 2011, is thought to have lost at least $5.7 million over the past two years – a figure that's likely to rise as the findings of independent audits are released.
A recent report by a Hickory-based auditor found that while noncompliance was rampant in the agency, an accounts payable audit revealed no evidence of embezzlement or misappropriation of assets, the news source reports. However, inaccurate record-keeping and accounting practices obscured the fact that the agency was in trouble until it was too late to keep it solvent.
"The lack of reliable financial information inherently prevented management from taking effective and timely corrective actions toward the operation of New River," the consultant found, as quoted by the news source.
Conducting regular accounts receivable and AP audits is vital in order to determine an organization's financial situation. Failure to do so accurately puts a company at risk of embezzlement and even bankruptcy.